Eurocell Reports Slight Reduction In Sales In Half Year Results -

EUROCELL PLC reported sales for the six months to 30 June 2023 were £184 million, down 2% on H1 2022, with 6% lower volume.

The vertically integrated UK manufacturer and distributor of roofline, window and door PVC products issued a trading update for its divisions showing that sales for the Profiles division fell by -1% and -3% for Building Plastics.

Eurocell Reports

For Profiles, there was reduced repair, maintenance and improvement (RMI) activity and a weaker new build market. The lower sales volumes were partially offset by recent market share gains. These included new fabricator accounts, with a pipeline potential remaining positive. There was also a net reduction in UK capacity following the recent announcement by UK Windows & Doors Group that it intends to shut its Duraflex extrusion business in September.

For Building Plastics, RMI volumes in the branch network remained steady but subdued, with increased competition for limited demand leading to some pressure on margins.

Eurocell plc says it has experienced persistent cost inflation, particularly for labour and electricity, the latter despite operate a rolling 12-month forward hedging policy. The company says it continues to offset these costs with selling price increases. Additionally, a restructuring programme in Q4 2022 reduced operating costs by c.£5m per year from the start of 2023.

Meanwhile, the company says PVC resin prices fell back slightly, and that it anticipates some easing of input cost pricing in H2, but that recycling feedstock prices remain significantly higher than the comparative period in 2022.

Outlook

Eurocell cites the latest Construction Product Association (CPA) Summer Forecast while reporting softening demand matched by reductions to its cost base.

The company says its end markets again weakened in H1, and there is a more challenging outlook for the remainder of the year. It has further reduced its workforce headcount, which will lower operating costs by another c.£2m in H2 and by £4m per year. Approximately £2m has been set aside for redundancy costs. The company says it continues to seek operational efficiencies to improve profits which it says should show next year.

Eurocell says that last year, in a change to historical seasonal patterns, sales volume and profit generation was weighted towards H1. This reflected strong demand in the RMI market in the first half, followed by a slowdown in smaller discretionary RMI work in H2.

This year, the company expects a heavy weighting towards H2, with sales returning to a more normal seasonality. It says profits in the second half will benefit from lower input prices (including raw materials and hedged electricity) and the operational cost savings already implemented.

Overall, Eurocell says the actions it is taking leave the business “well placed to benefit from a recovery” in its markets and will, over the medium-term, drive sustainable growth.

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